Question Details

Which of the following methods of calculating amortization 



1.	A company purchased factory equipment for $100,000. It is estimated that the equipment will have a $10,000 residual value at the end of its estimated 5-year useful life. If the company uses the doubledeclining-balance method of amortization, the amount of annual amortization recorded for the second year after purchase would be
		a.	$40,000.
		b.	$24,000.
		c.	$36,000.
		d.	$21,600.

	2.	A capital asset cost $24,000 and is estimated to have a $3,000 residual value at the end of its 8-year useful life. The annual amortization expense recorded for the third year using the doubledeclining-balance method would be
		a.	$2,010.
		b.	$3,375.
		c.	$2,953.
		d.	$2,297.

	3.	A factory machine was purchased for $20,000 on January 1, 2001.  It was estimated that it would have a $4,000 residual value at the end of its 5-year useful life. It was also estimated that the machine would be run 40,000 hours in the 5 years. If the actual number of machine hours run in 2001 was 4,000 hours and the company uses the units-of-activity method of amortization, the amount of amortization expense for 2001 would be
		a.	$2,000.
		b.	$3,200.
		c.	$4,000.
		d.	$1,600.

	4.	Single declining-balance is an amortization method that
		a.	is used for tax purposes.
		b.	must be used for financial statement purposes.
		c.	is required by provincial securities commissions.
		d.	expenses an asset over a single year because capital acquisitions must be expensed in the year purchased.

	5.	Which of the following methods of calculating amortization is production based?
		a.	Straight-line
		b.	Declining-balance
		c.	Units-of-activity
		d.	None of these




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